Federal changes to how you buy your next home!

What? You do want to be able to buy another home, or have your kids buy their own homes someday?

Congress has draft regulations for Qualified Residential Mortgages issued...

With the crazy partisan bickering—can we please stop this and get something done???— do we really know what is going on in our government? From the details of the federal budget (important to all of us, especially homeowners) to the overseas war….the total overhaul of the nation's mortgage finance system seems to be taking a backseat in the media. However, the government is hard at work building the framework that will govern who gets mortgages, for what type of home, and in what type of community that will affect generations to come.

Impact of QRM Regulations

When finalized, the QRM (Qualified Residential Mortgages) regulations will have a big impact on buyer qualification and the ability of many potential buyers to obtain financing. The initial draft contains many new mortgage requirements that include:

*The mortgage may only be for the principle residence with no balloon or interest-only payments.

*Buyers MUST make a minimum 20% down payment.

*Buyers must also pay for associated costs such as title insurance, lender fees and realtor commissions—these costs cannot be financed as part of the mortgage.

*Minimum credit standards for borrowers include provisions that the borrower cannot have any debt delinquencies within the previous two years and all debt payments must be current.

Despite voting to require the implementation of the QRM regulations, members of Congress are now expressing strong reservations over the stringent standards they helped put in place. CAI (Community Associations Institute) is concerned the QRM proposal may be too strict and will potentially exclude most homebuyers from receiving the best-priced and most affordable mortgages. An estimate released by a DC based financial trade association estimates that only 30% of current borrowers will meet the new QRM proposal or to put it more starkly, more than 70% of mortgages in the last decade would NOT meet the QRM standard as proposed. Six federal regulators (the Fed, OCC, FDIC, SEC, HUD, and FHFA) proposed this jointly published Qualified Residential Mortgage (QRM) rule in the federal register on April 19^th, 2011 and comments on the proposed rule are due by June 10, 2011.

CAI will submit comments to ensure the interests of residents in community associations are protected. You can follow the work of CAI and share your thoughts at www.caimortgagematters.org

NAR (National Association of Realtors) has also raised concerns with legislators about the impact these standards will have on the pricing, terms, and availability of non-QRM loans to otherwise creditworthy borrowers, including low and moderate income borrowers who maintain good credit and seek safe loan products to qualify for affordable mortgages. For more information about the issues raised by the proposed rule, please visit NAR's new QRM webpage at http://www.realtor.org/topics/qrm

So, if you want to buy another home someday, or have your kids buy their own homes and actually move out of yours—I suggest you contact your representatives directly as well. Remember to always vote as your first priority to have your needs met and then to speak to your elected officials, they need to hear what their constituents have to say.

Banks Must Get Moving on Loan Modifications!

While you are contacting your government representatives. Tell them you want the banks to work harder to work out loan modification programs on their existing loans with homeowners instead of short sales and foreclosures! The government is helping banks cover their losses, so that means YOU the taxpayer are helping banks and you deserve a voice! Let’s save some time and money. Most of my clients that short sale, or get foreclosed on, want to work with the bank to make up lost payments or modify their loan to a payment they manage with a job loss and change in job/salary— a hardship. I hear from my struggling client borrowers that their banks won't even consider a loan mod request until their mortgage is three months behind--THIS IS CRAZY! Why, instead of banks giving the home to a complete stranger at a discounted price, can't banks help borrowers who truly have a hardship get back on track? This would save so much money and time. Just qualify owners for what they can pay and extend the terms, or reduce the principal. Let's speak out to keep people in their homes! 

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